For a year and a half, advisers from Boulder County's EnergySmart program have been visiting homes and businesses, helping ferret out the spots where energy was leaking from the structures -- perhaps through un-insulated walls, old windows or inefficient furnaces -- and encouraging property owners to make changes.

Now, energy advisers have a new tool available to woo property owners into actually taking action on energy-efficiency improvements: access to financing.

The EnergySmart loan program, which is being administered by Elevations Credit Union, officially kicks off Wednesday with interest rates as low as 2.75 percent.

"This is really, really exciting," said Jeremy Epstein, energy efficiency and finance specialist for the EnergySmart program. "This has been in the works for almost three years."

EnergySmart advisers always have tried to make it as easy as possible for clients to make upgrades, helping them take advantage of all available rebates, offering micro-financing and providing a list of contractors who can do the work.

But since the EnergySmart program began, advisers have not been able to point clients in the direction of a large-scale loan program that is specifically geared to energy-efficiency upgrades -- even though Boulder County was one of the pioneers in offering such financing in the past.

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In 2008, Boulder County voters approved a ballot initiative that created the ClimateSmart Loan Program, which allowed county residents to borrow money through the county for energy-efficiency upgrades that would be paid back over time as a property assessment. But the program was canceled in 2010 after Fannie Mae and Freddie Mac balked at buying secondary mortgages of homes that had liens on them from programs such as ClimateSmart.

"When that was shut down, we went back to ground zero and now we're finally able to offer something to the public again," Epstein said.

Loan loss reserve

The new EnergySmart loan program -- which can be applied to some renewable energy projects as well as energy-efficiency upgrades -- looks and feels more like a traditional loan than ClimateSmart did. Interested property owners -- after meeting with an energy adviser -- can apply for the program at Elevations Credit Union using a process that's similar to getting a personal loan. But the interest rates for the energy loan program are likely to be much lower, thanks to a loan loss reserve set up by the county.

"If one of the loans that Elevations makes with its own money defaults, we're able to cover a pretty large portion of their losses with the loan loss reserve," Epstein said.

Elevations plans to loan out up to $35 million for upgrades in Boulder County and Denver, and the loan loss reserve -- which is set up using money from a federal grant -- will equal $8 million. As the initial loans are paid back, that money will be made available again for more loans.

The loans available for homeowners range from $500 to $25,000, are available for terms of three, five, seven or 10 years, and have a starting interest rate of 2.75 percent.

Epstein said that, just like the ClimateSmart loan program, the EnergySmart program is breaking new ground and setting up a model for others.

"Other institutions are going to be watching this to see what the default rates end up being," he said. "We expect them to be pretty low."

In part, that's because the type of borrower who wants to take out a loan for energy-efficiency upgrades has proven to be relatively responsible in the past, Epstein said, and because the upgrades themselves should help cut energy bills, freeing up more cash to repay the loans.

Green beliefs

Dennis Paul, a spokesman for Elevations, said the credit union was willing to take on the new program because it aligns with its green philosophy.

"It's an excellent fit for the credit union," he said. "... Many of our members have reached out to us about energy loans."

Even if the EnergySmart loan program proves to be a success, Boulder County has not given up on trying to lobby for a change in policy from the Federal Housing Finance Agency -- which regulates Fannie Mae and Freddie Mac -- that would make it possible to reinstate loans such as ClimateSmart, which are known generically as property-assessed clean energy, or PACE, loans.

"The cool thing about the Elevations loan program is that it's not a replacement for PACE, but it's something that is going to be really valuable for (county residents) right now," said Dan Rowland, a Boulder County spokesman. "It's a nice substitution for it, but it's certainly not a replacement for it. We at the county think there's a place for property-assessed loans, and we're going to keep fighting for that."

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